Scottish Government

Footnotes

1. See Klemperer (2002) for an overview of auction failures.
2. In Moxey et al. (1999) there are only two discrete farmer types, low-productivity and high-productivity, while Wu and Babcock (1996) consider a continuum of farmer types normalised within the range 0 _ a _ 1.
3. Note that White (2002) allows the fine to vary with the degree of cheating, but not according to the qualities of the farmer ( e.g. compliance costs).
4. That is, instead of bidding £1000 just for a 10-hectare conservation service, they are allowed to also bid £500 for a 5-ha service and £2000 for a 20-ha service, in the case of a linear suite. Their bid is thus (5: 500; 10: 1000; 20: 2000). They could also bid a continuous supply function, such as (for the linear case) £100 per ha up to a maximum of say 50 ha.
5. The BushTender pilots are reviewed in greater detail in the case studies section of this report.
6. The CRP bid selection procedure is described in the case studies section of this report.
7. See http://www.forestry.gov.uk/forestry/infd-5zgntw for details.
8. See http://www.forestry.gov.uk/pdf/WIATScoringSheetversion2.pdf/$FILE/WIATScoringSheetversion2.pdf for details.
9. These units are the numerator of the Biodiversity BBI as given in section 5.3.
10. The bids shown in Figure 1 are inclusive of any 'information rents' that bidders may have included in their bid price. We assume here that opportunity costs and information rents make up bids. This is different to the characterisation of Latacz-Lohmann and Van der Hamsvoort (1998), who differentiate the supply curve on account of it being exclusive of rents.
11. The corresponding output orientation would address the question by how much all quality attributes would have to be proportionately enhanced, given the bid, until the observation lies on the value-for-money frontier. The output orientation makes little sense in this context because bidders do not normally have control over the quality attributes of their bids.